After Construction Cryptocurrency ICO, Could Infrastructure Tokens Be Next on Horizon?

Last week’s ABA Forum on Construction Law’s annual meeting in New Orleans featured a panel that discussed the future of blockchain technology in construction (obviously a topic near and dear to our hearts here at AEC Labs.)

Specifically, the panel identified upcoming legislation in Arizona and Tennessee that allows for “smart contracts” as laying the groundwork for blockchain-powered construction industry applications. But it also suggested that there could be major implications for AEC stakeholders as legislators may be jumping the gun to implement technologies whose applications and legal ramifications they don’t fully understand just yet.

But the most interesting discussion came around the potential for “tokenization” of infrastructure assets via an “initial public token sale,” that would allow communities (or perhaps developers) to raise money for infrastructure projects, with the potential for those tokens to increase in value over time (like many other cryptocurrencies.)

Already, there are blockchain-powered startups looking to crack construction’s notoriously manual and paper-driven lending and financing processes. For example, the London-based cryptocurrency developer BitRent is calling itself the first blockchain-powered platform for commercial and residential real estate investors and developers that are searching for capital for early-stage construction projects.

After launching its ICO in January of 2018, the company is aiming to connect real estate developers with investors anywhere in the world – a powerful value proposition. Projects are published on the BitRent platform, and BitRent token holders (investors) can select which ones to invest in, in any denomination of tokens. BitRent ultimately hopes to provide construction monitoring and project quality control through IOT and smart contracts technologies which will be required for projects using the platform.

Again, BitRent (RNTB) launched with an ICO of 1 billion tokens in January of 2018 and, as of mid-April, stood in 1321st place in coinmarketcap.com’s list of cryptocurrencies with a market cap of approximately $566,000, trading at a price of $0.06. By October of 2018, BitRent plans to trade in 25 countries. (Here’s a link to its latest position).

Analysis from AEC Labs:

The marriage of smart contracts and cryptocurrency to fund construction projects – vertical, horizontal, or otherwise – is an interesting one that could ultimately make a lot of sense. Construction lending is an opaque process and there is no doubt that communities or even local governments looking to raise capital for infrastructure improvements could benefit from the tokenization of funding.

Still, many hurdles – regulatory, cultural, technological, and otherwise – remain before we see the first major crypto-backed infrastructure project. But we think this could be an important part of how governments could bridge the dramatic infrastructure funding gap that we have discussed here at AEC Labs before. It could also be an elegant way of creating a secondary market for trading equity in completed infrastructure projects which, to date, has been far outstripped by demand.

In any event, stay tuned for more discussion on blockchain and crypto as applied to the construction industry here, soon!

About The Author

Stephen Del Percio is the founder of AEC Labs. He's a civil engineer by training with nearly two decades of experience in the trenches of the construction industry, both as a project manager and an attorney. Stephen also took a two-year sabbatical from the industry inside Amazon.com, an experience which sparked his interested in how tech could be applied to, and ultimately improve, the AEC industry. You can find him on social media below or send him an email to connect!